Rajiv Gaddh vs Subodh Parkash

IN THE SUPREME COURT OF INDIA 2026 INSC 302 CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. OF 2026 (@ SLP (C) No. 4430 OF 2025)

RAJIV GADDH ... APPELLANT

VERSUS

SUBODH PARKASH … RESPONDENT

JUDGMENT

ALOK ARADHE, J.

1. Leave granted.

2. This appeal arises from the order dated 08.11.2024 passed by

the Punjab and Haryana High Court (High Court) whereby

application filed by the respondent under Section 11 of the

Arbitration and Conciliation Act, 1996 (Act) was allowed and

sole arbitrator was appointed. In order to appreciate the

challenge laid by the appellant to the impugned order, it is

necessary to set out relevant facts which are stated

hereinafter.

3. The parties jointly participated in an auction conducted by

Jammu & Kashmir Bank for auction of 550 marlas of land Signature Not Verified Digitally signed by KAPIL TANDON Date: 2026.04.01

situated in Hoshiarpur, Punjab (‘the Hoshiarpur Land’). The 15:38:55 IST Reason:

primary bid in respect of said land was made through 1 respondent’s firm M/s. Aastha Trading Company. A new

entity, namely M/s. JMD Special Steel Pvt. Ltd., in which both

the parties were directors, was utilized for funding and

registration purposes. A loan of Rs. 4.30 crores was obtained

from HDFC Bank by mortgaging various properties. A

Tripartite Agreement dated 20.03.2013 was executed between

the appellant, the respondent and HDFC Bank to regulate the

loan liability and to facilitate release of the mortgaged

properties.

4. On 02.04.2013, the parties executed three agreements to

resolve disputes relating to ‘the Hoshiarpur Land’ and other

joint ventures. The substance of the three agreements is as

follows: -

(i) Agreement 1: The appellant was required to execute

a sale deed in respect of 8 Kanal Land in favour of

respondent on or before 05.04.2014, upon its release from

HDFC Bank.

(ii) Agreement 2: The joint ventures between the

parties except ‘the Hoshiarpur Land’ stood dissolved. The

mortgaged properties were to be released in favour of

appellant’s entity for a sum of Rs. 3.75 crores.

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(iii) Agreement 3: The appellant was to hold 16.5 %

shares in ‘the Hoshiarpur Land’ with a separate agreement

to govern its settlement.

5. Clause 6 of the aforesaid agreements contains an arbitration

clause. The respondent invoked the arbitration clause by a

notice dated 06.05.2015 and subsequently filed an application

under Section 11 of the Act seeking appointment of an

arbitrator. The High Court, by order dated 27.11.2015,

appointed Justice M.S. Sullar, as sole Arbitrator, who later

recused himself. Thereafter, Justice V.K. Jhanji was

appointed on 12.08.2016. Allegations of bias were raised by

the respondent on 10.02.2017, leading to arbitrator’s recusal

on 11.02.2017. Subsequently, Justice Aftab Alam, was

appointed as sole Arbitrator, on 01.09.2017.

6. Competing claims were made before the sole Arbitrator, by

both parties. On 10.02.2018, the respondent was granted a

final opportunity to file his statement of claim, failing which

the proceedings were liable to be closed. The respondent filed

his claim on 16.03.2018, seeking recovery of Rs.4.16 crores.

The appellant filed his statement of defence, followed by a

rejoinder from the respondent.

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7. On 13.05.2019, the respondent and his counsel failed to

appear before the sole Arbitrator. Despite adjournment and a

failed mediation attempt, the respondent ceased participation

in the proceedings and, on 13.07.2019, sent an email to the

sole Arbitrator alleging bias. Further, allegations were raised

on 14.08.2019 along with an indication to appoint another

arbitrator. The Arbitrator declined this request and proceeded

with the arbitration. By communication dated 29.08.2019,

respondent refused to accept arbitrator’s authority and stated

that he would not participate further. He remained absent on

03.10.2019.

8. The respondent filed a civil suit seeking mandatory injunction

seeking termination of Arbitrator’s mandate. The sole

Arbitrator passed an award on 30.06.2020 observing that

claims were intertwined and overlapping. The Arbitrator

decreed the claim of appellant and dismissed the claim of

respondent. While noting the power to terminate proceedings

for non-prosecution, the Arbitrator granted a final opportunity

to revive its claim by giving three months time to file an

amended statement of claim, failing which the proceeding

would stand terminated in respondent’s claim. The

respondent failed to comply.

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9. The respondent challenged the arbitral award dated

30.06.2020, under Section 34 of the Act. This Court, by a

judgment dated 09.07.2021, passed in Civil Appeal No. 1599

of 2011, upheld the auction held by the Jammu & Kashmir

Bank regarding ‘the Hoshiarpur Land’ and held that auction

purchaser namely, the appellant and the respondent were

entitled to ‘the Hoshiarpur Land’.

10. On 01.09.2021, the respondent issued a fresh notice invoking

arbitration based on aforesaid judgment of this Court. The

appellant replied on 06.10.2021, asserting that respondent

should agitate his claim before the Arbitrator. Thereafter, on

25.11.2021, the respondent filed a fresh application under

Section 11 of the Act seeking appointment of an arbitrator.

11. By the impugned order dated 08.11.2024, the High Court

allowed the application and held that issue of res judicata

need not be examined at the stage of Section 11 proceedings,

leaving it to be decided by arbitral tribunal. The civil suit filed

by the respondent seeking termination of the mandate of the

Arbitrator was dismissed for non-prosecution on 23.07.2024.

In the aforesaid factual background, this appeal arises for our

consideration.

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12. Learned senior counsel for the appellant contended that the

respondent had abandoned the earlier arbitration proceedings

and was, therefore, barred from seeking a fresh appointment

of an Arbitrator. It is submitted that Order 23 Rule 1(3) of the

Code of Civil Procedure, 1908 (Code) imposes a bar on the

substitution of subsequent proceedings for the same cause of

action. In support of the aforesaid submissions, reliance has

been placed on the decision of this Court1.

13. Learned counsel for the respondent, on the other hand,

submitted that the issue of res judicata does not arise in a

proceeding under Section 11 of the Act and a fresh cause of

action accrued to the respondent, after judgment of this Court

dated 09.07.2021 in Civil Appeal No. 1599 of 2011. In support

of the aforesaid submission, reliance has been placed on the

decision of this Court2.

14. We have considered the rival submissions and have perused

the record.

15. The scope and ambit of Section 11 of the Act is well settled.

The jurisdiction under Section 11 of the Act is primarily

confined to determining existence of an arbitration agreement.

1 HPCL Bio-Fuels Ltd., v. Shahaji Bhanudas Bhad; 2024 SCC OnLine SC 3190. 2 Indian Oil Corporation Limited v. SPS Engineering Limited; (2011) 3 SCC 507. 6 The issue of res judicata does not arise for consideration in a

Section 11 proceeding3. Order 23 Rule 1 of the Code provides

that if the plaintiff either abandons the suit or part of the

claim or withdraws the same without leave of the court, then

he is precluded from instituting a fresh suit in respect of such

subject matter or such part of the claim. The plaintiff on

abandoning a suit or part of the claim or withdrawing the

same without leave of the court, also becomes liable to pay

such costs as may be imposed by the court as provided under

Order 23 Rule 1(4) of the Code. This Court in HPCL Bio-Fuels

Ltd., (supra) dealt with the issue, whether a fresh application

under Section 11(6) of the Act would be maintainable, when

no liberty to file a fresh application was granted at the time of

withdrawal of the first application under Section 11(6) of the

Act. A two-Judge Bench of this Court held that principles of

Order 23 Rule 1 of the Code prohibiting the institution of

fresh proceeding on the same cause of action without seeking

leave of the court to file a fresh application, would apply to

proceeding under Section 11(6) of the Act. It was further held

that in the absence of any liberty at the time of withdrawal of

3 Indian Oil Corporation Limited (supra).

7 the first application, the fresh application under Section 11 of

the Act is not maintainable.

16. Another two-Judge Bench of this Court4 has held that the

abandonment of the proceedings cannot be readily inferred

and only if the established conduct of the claimant is such

that it leads to only one conclusion that he has given up the

claim, any inference of abandonment can be drawn.

17. In the present case, the respondent himself by a notice dated

06.05.2015 had invoked the arbitration clause contained in

the agreements dated 02.04.2013 and had filed a petition on

03.07.2015 under Section 11(6) of the Act. The High Court, on

the application of the respondent, appointed an Arbitrator.

From the communication dated 29.08.2019 sent by sole

respondent to the Arbitrator informing him that he would not

participate in the proceeding, it is evident that respondent had

abandoned the proceeding.

18. Now, we may examine whether the subsequent petition filed by

the respondent was based on a different cause of action. It is

noteworthy that auction of ‘the Hoshiarpur Land’ by Jammu

& Kashmir Bank was held in 2005. The owners of the land

4 Dani Wooltex Corporation and Ors., v. Sheil Properties Pvt. Ltd. and Anr.; (2024) 7 SCC 1. 8 had challenged the same before the Debt Recovery Tribunal

and the Debt Recovery Appellate Tribunal. The Writ Petition

preferred by the owners of the land, namely, W.P. No. 8412 of

2009, was dismissed by High Court of Judicature at Bombay

vide judgment dated 30.09.2009, and the validity of the

auction was upheld. Thereafter, the owners approached this

Court by filing Civil Appeal No. 1599 of 2011. During the

pendency of the aforesaid Civil Appeal, the appellant and the

respondent entered into three agreements on 02.04.2013. The

respondent, during the pendency of the Civil Appeal filed by

the owner of the land, invoked the arbitration clause by

issuing a notice on 06.05.2015. The Civil Appeal preferred by

the owners of the land was dismissed on 09.07.2021 by this

Court.

19. It is pertinent to note that the issue, which was sub judice,

was with regard to validity of the auction. The dispute

between the appellant and the respondent was not the subject

matter of the Civil Appeal. Therefore, on dismissal of the Civil

Appeal filed by the owner of the land, no fresh cause of action

accrued to the respondent. Thus, it is axiomatic that the

subsequent application filed under Section 11(6) was based on

same cause of action and was barred on the principles 9 contained in Order 23 Rule 1 of the Code. A litigant cannot be

permitted to abuse the process of Court to file a fresh

proceeding again on the same cause of action. The bar

contained in Order 23 Rule 1 of the Code which applies to

proceeding under Section 11 of the Act is founded on Public

Policy. For the aforementioned reasons, we hold that the

subsequent application filed by the respondent was not

maintainable.

20. Accordingly, the impugned order dated 08.11.2024, passed by

the High Court is quashed and set aside. The appeal is

allowed. There shall be no order as to costs.

…..…….……………….………….……….J. [PAMIDIGHANTAM SRI NARASIMHA]

…..…….……………….………….……….J. [ALOK ARADHE]

NEW DELHI;

APRIL 1, 2026.

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